The European Commission is supporting plans to encourage consumers to buy greener cars and help manufacturers beat the economic slump.
In a meeting called by the European Union, between motor industry executives and political figures, a 32 billion package was proposed to supply low-interest loans to help manufacturers research and develop green technologies.
Consumers would also receive financial incentives to scrap older, more polluting cars, and to encourage them to buy newer, more efficient vehicles. Owners of high-polluting cars would be penalised by much higher taxes.
However, the European Investment Bank, which would be responsible for providing the loans, is less enthusiastic about lending money to an industry which has failed to meet environmental targets.